BAD SERVICE

Millions for millionaires but not a dime for the stiffs. How's that for a new State of Illinois motto?

It was inspired after watching the latest maneuvering of Judy Baar Topinka, our new state treasurer and one of the fastest-rising stars in Republican politics.

Shortly after taking over the treasurer's office last January,the tough-talking former state senator let it be known that she would not be running, as she put it, "a social service agency."

Topinka proceeded to dismantle or scale back several departmental programs aimed at fostering economic development and other good works in corners of the state that need help.

First she slapped a moratorium on the "linked deposit" program, in which the state places some of its cash in commercial banks at interest rates MACRO NOT FOUND - r

slightly below market. In return the banks make loans on jobs-generating projects, assuming risks they otherwise might not take. And by all accounts, the program has been a huge success, figuring recently in the retention and expansion of the 850-job Tootsie Roll factory on Chicago's Southwest Side, and the job-saving employee-buyout of a big printing plant in downstate Sparta, Ill.

Sure, the state forfeited some interest income. But it was the banks that took the loan risk, not the taxpayers. One audit even showed that linked deposits actually out-earned the rest of the state's investment portfolio during 1993. That means the saved jobs and enriched local tax base were pure gravy.

Topinka also lowered the boom on "Smart Money." It was a program aimed at helping welfare recipients open bank accounts rather than cash checks at currency exchanges, where they get clipped for a 90-cent fee plus 1.2 percent of the check amount. For a typical welfare family the fees add up to about $64 annually.

In return for little more than good publicity, participating Smart Money banks provided no-fee checking accounts to more than 3,000 poor families, most of whom had never before been inside a bank.

But one of Topinka's first acts as treasurer was to eliminate Smart Money as "not cost-effective" and to fire Clara June Stewart, the popular African-American woman who ran the program. The termination of a non-political, $35,000-a-year civil servant raised eyebrows because Topinka had just found room in her budget for a pair of $65,000-a-year press officers to trumpet her accomplishments.

Judy Topinka, it would appear, does not intend to spend the rest of her political life as treasurer of the State of Illinois. She is among the first Illinois pols to declare support for ultraconservative Republican presidential candidate Phil Gramm. Many think the former newspaper reporter from west suburban Riverside has her sights set on Congress, or even the governor's mansion.

Which may explain why Topinka decided last week to rid the treasurer's office of a nasty political skeleton. If there's a publicity bath to be taken, best to take it in the first year of office than the last, when she might be running for who-knows-what.

But Topinka may have miscalculated this one.

Last Wednesday, she recommended that taxpayers essentially forgive $30 million worth of non-performing loans made years ago to a couple of politically-connected real estate developers.

Topinka had nothing to do with issuing the loans back in 1982. They were the work of then-Gov. Jim Thompson and then-treasurer Jerome Cosentino, who for some reason decided that the economic future of central Illinois would be enhanced by adding a few quality hotels.

So $13.4 million in state funds was loaned directly to an investment group headed by Gary Fears, a bipartisan political fundraiser, to build a Holiday Inn in Collinsville. And $15.5 million was loaned to a group led by William Cellini, then and now the state's top Republican money-man and patronage broker. The Cellini group developed the Springfield Renaissance Hotel, which, while not in the same league as The Drake of Chicago, set a new standard for luxury within walking distance of the Illinois Capitol. What these hotels didn't do, if their accountants are to be believed, is make money. The two developers each owe the state about $20 million in unpaid interest and principal. The state would be within its rights to foreclose on the properties in 1999 and auction them to the highest bidder. But, Topinka says she has a better idea.

Besides, what politician wants that kind of publicity hovering over the next election season? Not to mention the effect a foreclosure might have on Bill Cellini's far-flung business ventures, which include part-ownership of the state-licensed Alton Belle riverboat casino.

So Topinka has come up with a loan forgiveness plan that the average Illinois homeowner can only dream about. Cellini & Co. will be allowed to settle its entire debt for just $3.75 million; Fears & Co. for $6.3 million.

Never mind that Cellini's hotel has been assessed for property tax purposes at nearly $8 million. Or that Topinka's predecessor in the treasurer's office, Patrick Quinn, settled a similar bad hotel loan two years ago by recapturing 60 cents on the dollar.

If Gov. Jim Edgar, who held a political fundraiser at the Renaissance last week, approves Topinka's proposal, the Cellini group would get to keep the Renaissance for a mere 19 cents on the dollar.

"We took a hit," Topinka said last Wednesday in announcing her plan. "It's a dog and we're putting the dog to sleep."

It's a dog, alright. And if Judy Baar Topinka doesn't do something about her priorities, this mutt will wake up some day and bite her when she least expects it.